Planning to invest in a commercial property? 7 things to keep in mind

As per a recent report by CBRE, India has emerged as a high-yield real estate market in the Asia Pacific region. The report stated that India posted the highest real estate yields across key asset categories such as office spaces, retail, logistics, hotels and student housing. With a rise in commercial activities and several multinational companies expanding their presence in the country, it is an opportune time for investors to expand their commercial real estate portfolio.

Macroeconomic factors
As the country continues to aspire to be the global hub of commercial activity, there are several factors that are boosting it. India’s strong economic fundamentals, rapid urbanization, expanding corporate occupier base and rising domestic consumption are contributing towards a rise in broad-based demands across sectors. This in turn is also influencing investor decisions to deploy capital as they now look at India not as a high-growth market, but as a market that offers depth, liquidity and scalable institutional opportunities. As more industrial-grade supply enters the market and REITs, structure debt and domestic capital become more sophisticated, India’s real estate ecosystem is also maturing far beyond a traditional equity-led market. Harsh Jagwani, Managing Director, Notandas Realty shares 7 important aspects to consider before investing in a commercial property.

Key elements to keep in mind
During this opportune moment, several established as well as young investors would wonder about the determining elements to consider while investing in commercial real estate properties. Thereby, there are a few key factors to keep in mind while expanding their portfolio in this segment.

1. Proximity: Commercial property’s close proximity to major transportation such as railways or highways as well major business districts plays a key role in its demand and growth. It also plays an influential role in determining investment value as well as ease of lifestyle.

2. Infrastructure: The infrastructure of a commercial property has witnessed drastic changes over the past few years. Today, tech forward and modern spaces are helping enable seamless work, which in turn has significantly improved efficiency and productivity. Today, modern facilities such as digitally enabled security systems, automated checks and processes, private elevators for C-suite executives, etc are considered to be amongst the integral design of new commercial properties.
3. Design: New commercial space designs are focused on integrating a sophisticated lifestyle approach for employees as well. This includes integrating amenities that go beyond work such as cafes, gyms, pickle ball courts, etc. Developers are also designing workspaces that are not only flexible but are sustainability-focused as well.
4. Demand for large offices: Premium office spaces with areas of 100,000 square feet and above are also witnessing increased traction in India. This demand is also witnessing strong growth from large occupiers, particularly Global Capability Centres (GCCs), technology firms and multinational corporations expanding their operations in India.
5. Luxury commercial Properties: Such properties provide higher yields as they are a higher quality asset as well as the presence that such spaces command. They not only ensure higher returns, but they also project a higher prestige value when purchased in certain structures and locations. Each developer and the category of the commercial space will command their own premium and investment value.

6. Category assets: Offices and hospitality assets are emerging as the dominant segments in the commercial real estate sector. The demand for Grade-A office spaces, business hotels and integrated retail destinations continue to accelerate as global corporations expand their operations in the country. On the other hand, hospitality is riding the twin engine demand of tourism and corporate travel.
7. Changing demographic: India’s urban demographic is also reshaping demand for commercial spaces. As the urban population is projected to reach around 600 million by 2036, cities are transforming into hubs of economic activity. Due to this shift, developers are increasingly creating mixed-use properties that combine offices, retail, entertainment and residential components within a single ecosystem.

Transforming Landscape
As India’s commercial real estate market is at the intersection of economic ambition and urban transformation, corporate expansion, infrastructural investments and demographic shifts are reshaping how cities grow and businesses operate within them. The next decade could witness the sector evolving from a rapidly growing market into one of the defining pillars of the country's economic growth. This in turn underscores the long-terms confidence in India’s office market and will also help investors diversify their portfolio across different segments of the sector.


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